finance

Lew, an individual investor, sold 100 shares of Global Tech stock on Monday. Janice, another individual investor, purchased those shares but never met Lew. You know for certain that this trade occurred in which market?

secondary market

A stock quote shows a last price of 32.13, a P/E of 17, and a net change of −.23. Based on this information, which one of the following statements is correct?

The earnings per share are equal to 1/17th of $32.13

All else constant, a bond will sell at ________ when the yield to maturity is ________ the coupon rate.

a discount; higher than

All else constant, a coupon bond that is selling at a premium, must have

a yield to maturity that is less than the coupon rate

Bonds issued by the U.S. government

are considered to be default-free

Corporate dividends

are taxed at the personal level even though they are paid from after-tax income.

Based on the dividend growth model, an increase in investors' overall level of required returns will

cause the market values of all stocks to decrease, all else held constant.

The voting procedure whereby shareholders may cast all of their votes for one candidate for the board of directors is called ________ voting.

cumulative

All else constant, as the market price of a bond increases the current yield ________ and the yield to maturity ________.

decreases; decreases

Assume you purchase a bond with a quoted price of 98.6208 on June 30. The bond pays interest on February 1 and August 1. The invoice price you pay for this purchase will equal the

dirty price

The yield to maturity on a bond is the rate

of return currently required by the market.

A bond with both a face value and a market value of $1,000 is called a ________ bond.

par value

Municipal bonds

primarily appeal to high tax-bracket investors

The market in which new securities are originally sold to investors is called the ________ market.

primary

The parts of an indenture that protect the interests of the lender by limiting certain actions that a company might take during the term of the loan are called

protective covenants.

The voting procedure where a shareholder grants authority to another individual to vote his/her shares is called ________ voting.

proxy

ABC bonds have a coupon rate of 9 percent, pay interest semiannually, and sell at par. Each of these bonds has a market price of ________ and interest payments of ________.

$1,000; $45

Which one of these represents the portion of a stock's rate of return that is attributable to the growth rate of the dividends?

Capital gains yield

The total return on a stock is equal to

Capital gains yield + Dividend yield.

According to finance professionals, which one of these factors has the biggest impact on a firm's PE ratio?

Growth opportunities

Jack owns shares of stock in Boynton Foods and wants to be elected to the company's board of directors. There are 10,000 shares of stock outstanding and each share is granted one vote for each open position on the board. Presently, the company is voting to elect two new directors. Jack can be assured of his election

if cumulative voting applies and he owns one-third of the shares, plus one additional share

Interest rate risk ________ as the time to maturity increases

increases at a decreasing rate

The owner of preferred stock

is entitled to a distribution of income prior to the common shareholders.

Alto stock pays an annual dividend of $1.10 a share and has done so for the past 6 years. No changes in the dividend amount are expected. The relevant market rate of return is 7.8 percent. Given this, one share of this stock

is valued as a perpetuity.

An upward sloping yield curve indicates

long-term rates are higher than medium-term rates

The voting procedure where you must control 50 percent plus one of the outstanding shares of stock to guarantee that you will win a seat on the board of directors is called ________ voting.

straight

Interest rate risk increases as

the coupon payment decreases.

Last year, Theo purchased a fixed-rate, 7-year bond at par that has a coupon rate of 6.5 percent. If the current market rate for this type and quality of bond is 6.8 percent, then he should expect

to realize a capital loss if he sold the bond at today's market price